- 15% drop was what whales do to shake out ‘weak’ hands
- Plenty of reasons to still be bullish, with $9,400 a key level
- More downside to come if $7,600 is breached
Bitcoin’s 15% crash over the weekend was a shock to the system of many bulls, but it is just the kind of tricks whales pull in order to shake the tree and see how much Bitcoin falls out. The response so far has been impressive, with Bitcoin reclaiming nearly $1,000 following the crash, and it is coming up to a crucial level in terms of where it can go next.
$9,400 the Key Level for Bulls
Following the weekend’s price action it is more important than ever to look at both the bullish and bearish scenarios, with volatility virtually guaranteed around halving time:
The pullback after the dump has ensured that Bitcoin remains above the weekly range equilibrium, suggesting that the trend is still bullish. We can consider this to continue to be the unless we lose the $7,600-$7,800 level.
The bullish argument calls for a reclaim of $9,400, followed by a retest of the local highs at $10,000. Breaking this with conviction could see Bitcoin heading for $10,400, above which the $11,500 level is the next major level. Breaking this would suggest we are starting a new market cycle.
There is a second bullish scenario which presents itself. This sees a sweep of the high $7,000s and a bounce off the crucial $7,800 are before the resumption of the uptrend. This would essentially be a large scale liquidity sweep, after which we can assume the same bullish targets as above:
Bearish Below $7,600
The bearish argument would see $7,600 taken out, followed by a drop to $6,600 and perhaps even $5,800. Any such drop would be a godsend to anyone with fiat on the sidelines, and should certainly be seen as opportunities to pick up more Bitcoin:
Anyone familiar with the Wykoff distribution pattern will know that Bitcoin has followed it incredibly closely since its drop to $3,850 in March. While the weekend’s dump has seen it deviate to an extent, exaggerated moves are not uncommon in such a pattern, and a continuation of such a pattern cannot be ignored. This would see us taking steps towards the same bullish targets outlined above, with small pullbacks on the way.
Bitcoin Still Strong Fundamentally
Fundamentally Bitcoin is still in a strong position – the halving dump has happened, the actual supply shock is yet to come, and the narrative of Bitcoin as a hedge, helped by the comments by Paul Tudor Jones, is still strong. It is for this combination of reasons that I think Bitcoin has a better chance of going up than down right now.
